Transcripts For CNBC Squawk On The Street 20240713

Europes closed. Apple didnt give a forecast and this white house commentary. I would start with the white house commentary the apple stock, even after you knew that there was no guidance, was up rather dramatically when we got word that the United States was going to retaliate against china, that was it it gave up the ghost and accelerated the decline in amazon we did have the greatest month since 1987 so that january month was augmented by tremendous japanese buying in 87. It was artificial. This was a solid rally off the bottom its time to consolidate theres no we have to get used to consolidation meaning a 400point dow instead of a 100point dow. We went down 34 in 25 sessions, up 35 in 27 sessions what does consolidation mean now . It has to do with the idea that we give up some of this last gain. The last gain was a short squeeze in airlines, in travel, leisure. We started believing in marriott up 10. Then yesterday we had a really strange day where the most important thing that happened was the bond got 25 billion, it was oversubscribed if you look at what the real black holes are in our economy, its giant Companies Like boeing, and then, of course, all the Smaller Companies that add up to 50 Million People. To take boeing off the table is a godsend. But it also is a recognition that if thats all youre hoping for, well have a backslide. Watch southwest air. They priced a deal well below the market if that goes through 28, say, youll realize that it was a mistake to buy it, and thats what im focused on. Can you do secondaries to raise money. Or initial offerings of stock we should say. Yes from the company to raise actual equity capital. Right primaries. Of course right. We got loose with that term through the years. Youre right. I was listening to john rogers there talking about one day the market will change, it cant be led by five names. And eventually active management will come back in to vogue i cant help but think, man, i feel like i heard that before. Oh, about a thousand times for the last 20 years. The microsoft Conference Call where satya is talking about, look, were set up for this moment the conversation that josh and i had with tim cook before the Conference Call pretty much set up for this moment amazon set up for this moment. Netflix may be the stock that is most set up for this moment. Google now alphabet crushedit. I just i think john is right. This is f. A. N. G. s moment again. Only apple really has chinese exposure what will you do with stocks that are once again set up for the moment maybe these are better companies. I thought the amazon Conference Call was incredible. Guys, were not making money were setting up stick with us. Thats what Great Companies do thats what Great Companies do 4 billion in incremental costs related to covid 300 million spent on testing which i thought was just an astounding sum it makes you wonder how many other companies will be hit with a significant testing bill if thats a part of their reopening plan in some way or getting back to work, i should say. Not that theyre reopening everybody has been working from home that 33 growth the United States of amazon, you cant get testing, so they decide well take care of it u. S. Health care no Amazon Health care yeah. Aws seems to have disappointed people given the growth in azure, even google cloud, off smaller bases. Azure is getting large 33 growth it sounds funny. 33 growth, nonetheless, a bit shy. They sort of talked about a mixed bag of industries on the call there in terms of aws, which is a very important part yo overall of the profitability of the company. They did not see a decline in advertising in a way that many had anticipated. Ads still strong yes, a little bit of a dip in march, the same way google or alphabet and facebook saw. But really a lot of the advertising is by the merchants and it seemed to be continued strong, at least according to commentary i liked advertising i was confused about aws, then i thought about thomas currian who runs google cloud. Azure was so strong. The amazon people have been adamant saying they havent been losing share if you want to know where the growth was, it was with the other two. I think its something we have to monitor this company has a lot of moving parts. If you go over the revenues, they were incredibly strong. Yeah i like to see andy jasse make 40 . But you have better come pet pes now than two years ago mmhmm. Yeah. The street, jim, 15 price target hikes today on amazon. Four of them on 3k jpm goes to 3k from 2525 what is a reasonable price if youre willing to look past q2 i think it can go to 3k lets say they set it up i think that six months from now, most of their competition say in grocery will be gone. I mean that. You just will get hurt badly in grocery. Walmart will still be there. Target will still be there they are talking about how theyll go after food. Food is the one area they werent able to do if they go after food remember, they had to cut back on what they were shipping now theyll go back and be able to do everything they talked about how amazon entertainment, which they didnt address before, so good. Alexa good so many good things. They had the most there was too much low hanging fruit for them to eat this quarter thats a high quality problem. Theyre very spartan in what they tell you, but i like what they told you it also was up 100 points yesterday, which made no sense. In the same way apple was big. We had a market going into the end of the month these stocks are going to lead us down, but theyll be the ones you will want to buy quickly right amazon coming into the session up 34 the single best performer out there that you can see, even better than netflixs performance, only outdone by tesla, which is up 87 you fascist youre a fascist theres a big basket of news in testing, vaccines, diagnostics. You had astrazeneca talking to Richard Engel of nbc saying they hope to have a vaccine ready for emergency use at the end of the year moderna making a billion batches in july, and gilead earlier today talking about remdesivir and more maybe its a bit of a surprise to us this medicine also worked quite well late in the disease course as well so, you know, many of these patients in the nih trial were on mechanical ventilation. Around 30 those are the most severe patients thats something that is has a big impact for patients, of course, with so many hospitalized patients in such great need that was really important so why the downgrades today because theyre giving it away theyre a company that is a good deed doer. Otherwise known as philanthropists. We dont award those higher multiple what gilead is doing is trying to save lives, they a lot of the Drug Companies have said, look, well lose a lot of money here because what we do is save lives. Maybe this is the true colors. I think it is. That interview should change theres so many people who are negative i would like dr. Nissen to come on about it. Hes been a critic on twitter. You can listen to mr. Oday, who gave a lot of time to squawk. He was saying people were going to die, if they had not died, they would have died without this the big issue is it didnt help mortalities. Thats at odds but he said you will see subsets. You will see subsets and the numbers will be good i also thought he made it clear, like dr. Fauci, this is part of a cocktail there will be others going with it if you still felt negative about what is going to happen with the pandemic after listening to oday, then you were not listening. You made up your mind that were all going to die like billy in the predator. That is not case i thought oday was positive gottlieb, very skeptic, was positive well what . Gottlieb said it changes the risk profile, which we talked about, which is great. But i dont know that it changes anybodys behavior in terms of saying now i feel free to go about my business as i wanted to because i may end up in the hospital but at least i know i have a better chance of not dying should i end up in the hospital gottlieb made it clear the prophylactic orally taken antivirals that could be taken prophylactically are still some time away. Were hoping they are here as possible those are the Game Changers in a real way that change behavior, not remdesivir no. Look, if anyone is doing anything different in terms of social distancing, wearing a mask, thats controversial, i dont think it should be, they shouldnt. This is the most dangerous contagion this is the equivalent to the spanish flu. I was thinking when oday said off of a ventilator, ventilator is a death sentence. 80 to 85 of a people on a ventilator die, its nice to think you can push that back if you can get more people out of the hospital faster, thats positive i will go back to fauci and feel like i do believe that this is the beginning of the end and it is were so far away from it. I think well have a huge explosion of this thing in the fall we have to be ready. I hope theres an inhaler. I dont know about moderna, but i felt better. Look, as someone who is worried, i was less worried about being in the hospital. Thats all im saying. David, i still dont want to be near you yeah. Its direction not magnitude at this point exactly stay away. When we come back, well talk to larry kudlow about reopening strategy all around the country. Markets, the economy, china, tariffs and a lot more dont go away. Across america, Business Owners are figuring things out. Finding new ways to serve customers. Connect employees. And work with partners. Comcast business is right there with you. With a network that helps give you speed, reliability and security. And enough bandwidth to handle all your connected devices. Voice Solutions Like remote Call Forwarding and readable voicemail. And safe, convenient installation. When every connection counts, you can count on us. Get the connectivity your business needs. Call today. Comcast business. Its got all my favorite shows turn oright there. Boom, i wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. A lot of news to get to this morning with the director of the National Economic council, larry kudlow he joins us live happy friday good to talk to you. Thank you, carl appreciate it. A lot to get to regarding the reopening. Im sure youre aware, market got a bit of a chill yesterday on these reports of ways the president is thinking about trying to punish china, headlines about avoiding certain debt obligations, you just want to iron that out yes as i told eamon yesterday, full faith and credit of the United States debt obligations is sa sacrosanct not only the full faith and credit of our debt obligations and other commitments but our intention to keep the dollar as the worlds reserve currency let me put any of that to rest china issues, dont get me wrong. The president will be dealing with those issues. They have a lot to answer for. The virus originated there a lack of transparency all that will be sorted out over time regarding treasury, debt, and the full faith and credit of the United States, that will not change then what is being considered, larry . How do you walk the tightrope given the fact were still dependent on them for important things coming down the supply chain like food, drugs, ppe and all sorts of things . I will just say at this point, we are as a matter of policy deliberations, were looking at didnt options to perhaps bring American Companies located in china and perhaps elsewhere around the world back home to the u. S. The there are a number of ways to do that by the way, full cash expensing 100 cash expensinexpensing, wh be phasing down in the next year or two for American Companies that has to be bolstered thats a key growth and senate element. We could pay the moving expenses for these companies. Theres a number of options were looking at so well have to i dont want to get ahead of that curve but we like these supply chains to be based here i think to some extent we see the importance of that i dont want to do this overnight. I dont want to jar markets or anything like that so we will work through. We will talk to the chinese. The str issued a report, i guess yesterday or the day before, that phase one dealing with china is moving along. Maybe a little slow on the commodity purchases because of the damage to the economy, all our economies from the virus but it appears at least at this point that china is working to implement the trade deal so we will see they have a lot to answer for. Theyll be held accountable. Again, full faith and credit of United States debt obligations will be maintained thats sacrosanct. Does the president or the Administration Believe that somehow the chinese engineered the release of this virus to either derail his reelection or weasel out of phase one or both . Carl, there are a lot of theories around. A lot of discussions around. The president has his views on this those views are being developed by the help of our intelligence people and others. So i dont want to go too far down that road it will be up to the president to make final decisions here what we know with certainty we had the g7 video teleconference meeting its about two weeks ago now pretty much all the g7 leaders agreed that the virus originated in china and some of those g7 leaders were particularly vociferous about the lack of chinese transparency and cooperation in pursuing investigations to get to the bottom of this. So, that is an open discussion, an ongoing discussion. Larry, always great to hear from you thanks for coming on thanks. Just to follow up on what carl is talking about. If the president feels that the chinese acted inappropriately, theres a lot of ways he could really come after them or retaliate. One would be to raise the tariffs. That was fine when we had unemployment that was incredibly low. If you have 30 Million People unemployed, we know that harkins back to the Great Depression if you raise tariffs, even if you totally despise the chinese and think they are a very bad actor, wouldnt it be better to wait instead of retaliating against them on key technologyies . As said before, put it in this framework, important way to look at it it seems like years ago, but it was just a few months ago we signed a good phase one trade deal with china. As i said, ustr put out a report recently that indicates the chinese are cooperating and implementing thats an important piece. With respect to future tariff decisions, and other measures, thats going to be up to the president. I dont know that theres any rush right now oure efforts here are to first o all continue to get this virus down open up the economy. Get folks back to work lets get some Economic Growth back theres a lot of pent up demand. Lets help businesses survive. Lets help payroll workers survive. Thats really subject number one. We are making progress on that so on the china business, its up in the air. They will be held accountable for it no question about that how, when, where, why, i will leave that up to the president okay. Lets switch to the economy directly we know that the activities to keep people in their job are extraordinary. Its one of the most amazing programs, whether its ppp or what the Federal Reserve is doing. One element of it you taught me, larry, you have to be careful not to overincentivize people not to work. We raisedthe Unemployment Benefits to the point where as a Small Business person i cannot compete with the government to keep people. Yet i got ppp for one of my places im concerned that the government has made it impossible for me to rehire given the fact i cant beat the government what do you do its an important concern its a very good concern the unemployment plus 60 bucks federal plus up which has created some of these disincentives youre talking about is something we will look at carefully it ends in july. So a lot of people are concerned about the incentive. Weve tried to do this in a way that will create incentives, not destroy them for both work and business so we have payroll tax holiday for business the president , as you know, is very keen on a payroll tax holiday for the work force that would gross up after tax income by roughly 7. 6 so that would be a good start in that direction we are also looking internally im not authorized to make pronouncements were having some strong discussions with the Economics Team and the president were looking very carefully at middle class tax relief, at middle class regulatory relief, at helping the restaurants, and the baseball stadiums with larger deductions. Were looking at shielding, liability shields for these Small Businesses as they open up as you know, we provided 175 million americans with assistance, cash and liquidity to keep them going through this incredibly difficult hardship period until we get to the other side, hopefully in the second half of the year we are aware of the disincentive issue. Thats why were looking at a lot of middle class tax and regulatory relief. I know theres strong sentiment in some quarters, both here and in the white house and on capitol hill to look very carefully at that unemployment plus up which created the disincentives. Maybe we needed it at the beginning because you pull out all the stops, thats what government has to do with an unbelievable 100year crisis kind of thing that doesnt mean forever. We want folks to work. I think americans want to work you probably saw in the gdp, a 13 savings rate in the First Quarter, thats a remarkable number that shows you pentup demand. The Second Quarter will be worse numbers. No question about it the hardship issue will be more difficult. Its happening now hopefully we can provide growth incentives so when the states reopen, and may is the transition month, may and june probably, when the reopening comes, this economy will be poised to resume the strong growth that President Trumps policies fostered in the first years. I employed everything done to keep people working. Its monumental. I think its shocking to people. Thats one reason why the market is up. Is there a limit to the amount of money that the fed the federal government can pump into the economy . Is it one of those things where you say the limit is anything that it caktakes to not have a Great Depression i think weve all suggested that we will do whatever it takes. Early in this the president said he will use all the powers of the federal government to provide assistance to help folks and businesses, theres always that now that were moving forward, again, we are looking at policies that will provide growth incentive, not just more cash and liquidity but growth incentives we like to restart entrepreneurship for example we had the animal spirits roaring, roaring in recent years. January and february in q1 was showing a run rate of 3. 1 at an annual rate before the virus came down exponentially in ways that nobody anticipated. My thought here is you kind of have to do both. You cant close the door on necessary sassistance programs, by the same token you have to think through what are the best growth and incentive policies for the medium and long run for the economy . Im heartened to some extent this is a terrible situation its hardship and difficulty everywhere but look, cbo, a bunch of private surveys and the wall street journal Economist Survey are look at almost 20 growth in the second half of 2020 and almost 3 growth in 2021 after we pause this is a pause period, when we come back and discuss with congress that growth incentives will be crucial to whatever policy actions we take. On that note we have many ceos from some of the Largest Companies in the country join us and have this week, many of them are talking about what are fairly significant cuts to their Capital Expenditures a phased in return to work in terms of at least to the workplace for their workers. We can imagine the behavior of the American Consumer will not change overnight i hear you saying you will see or hope to see Significant Growth next year how do you really get there, given all the cutting thats taking place right now and the uncertainty that still exists in terms of what behaviors will look like. Those are important points. Weve been meeting with ceos constantly in every industry in america. We had major retails earlier this week. You are right. I think theres a transition i think, you know, what we hear, companies are anxious to reopen but they know how Important Health and safety and security is ill go back to our guidelines put out by the medical team a few weeks ago. Within 14 days, the downward adjustment in new cases, best practices for cleanliness, maybe taking your temperature, the forehead temperature thing the new test kits, we do them here at the white house every week theres swabs in your nose, you get results quickly. All these things will come into play thats what the top Business Executives want, thats what the top labor Union Executives want. We talk to them as well. Well have to work through this. The states will make these decisions, the individual companies will make these decisions, i hope think Pay Attention to our guidelines as they say they will last point on this, one of the characteristics of dealing with the crisis here, you know, the last time it happened was about 100 years ago, is that President Trump as a matter of instinct and philosophy has every step of the way worked with the private sector theres reason that we have spent so much time and Vice President mike pence as well deserves so much credit. We have spent so much time with the businesses and the unions for that matter. But weve relied on the businesses with respect to respirators, ventilators, test kits, therapies now, vaccinations this is a very strong cooperative effort its not just government top down controls. Its incredibly heavy use of private sector entrepreneurship, skills and management. Theyre awful smart, probably smarter than we are. That gives me hope that working cooperatively we can get through this i believe, david, yes, im an optimist always. I believe we can get through this i believe the worst is nearly over i hope and pray that is the case and i think as this infection rate case comes down, its an omen that america is not far from getting to the other side look, lets face it, health and safety is vital. But Economic Health and safety is also vital. So we are trying to balance the two. Yeah. On that point, larry, mcconnell has made Liability Protection pretty big deal here as a condition for further stimulus how do you get people to agree to come back to work when they are uncertain about their resource if they get sick again at work . I dont think thats the issue. Employees will be taken care of. Theres a lot of workmans compensation and osha rules here i think the issue this is something i support is the liability shield for businesses, particularly the Small Businesses that may not have this insurance type protection this is a tricky business. You want to emphasize health and safety, absolutely ill leave it up to the restaurants and the small stores and the large stores and the Office Buildings they will figure out ways to do that just think so, a restaurant opens up, ill use a restaurant as an example. Customers come n presumably the physical distancing is adequate and maybe you test their forehead for temperatures, Something Like that. Three days later, unfortunately or tragically perhaps they come down with the virus. Its awfully hard to know where that contact may have happened cy think therei think theres af instincts in parts of our society that they just will come in and sue right away and these businesses will go out of business having hardly started again. There has to be protection here. Im not calling it frivolous lawsuits, but im saying in a highly contagious virus situation there should be a liability shield theres a lot of sympathy for that point of view in the white house. You raised a great point. Lets use the restaurant example and press that ive dop tne the budgets for my restaurants, revenues are in half you have to take out half the seats, you cant do physical distancing without that. Costs remain the same. How about incentives to tie us over until we have a vaccine well, one incentive were looking at this may not be what youre thinking about, jimmy, is that business meals and entertainment and so forth used to be 100 deductible, then it was knocked down to 50 , i believe in the tax act of 2017 i think theres large sentiment here to move that back up to 100 , which might help the volume of customers as these business and restaurants start up again thats one thought there may be other thoughts as well again, too, the president is very keen on cutting the payroll tax. We did it for businesses to year end, he wants to do it for the work force to at least get the tax cost down and provide incentives at the margins. There may be other ways to do it we can do this look, we can figure this out we have to emphasize health and safety absolutely we also have to emphasize Economic Growth incentives across the board i dont want to be raising taxes. I dont want to be reregulating the economy. Thats not the time for that this is the time to open the country, open the businesses, to open the economy, to liberalize, to make it pay to work, to make it pay to invest, to make it pay to start up a new company, to make it pay to hire 100 workers that becomes 500 workers that becomes 5,000 workers. This is a time to open up this economy. We have to consider that as we are here were going through a rigorous policy process right now thank you, larry. Thank you. Always good to talk to you larry, about to see you all right thanks, fellas be well, stay safe thanks for having me back. You, too. Jim, we lost 24k just by a shade here boeing and verizon the only two propping the dow up at the moment i see a lot of positives. I went over my notes yesterday on apple josh and i do get an opportunity to speak to tim cook and the cfo. The questions that i had were about being at home. The work from home is incredible we all know that that is just a great thing for apple. Many of us have apple at home and are stuck with these other companies at work. He thinks that could change. The enterprise may not be the tyranny that it has been maybe apple will get into the enterprise far more. I thought that was very important. Another thing he said, the i was worried about the physical distancing of the stores and tim said dont dont. The online is off the charts so, i felt very good again, i reiterate that what i was most worried about is something that larry kudlow addressed. I thought in answer to your questions, carl, that there is not going to be a strong retaliatory effort right now now, maybe larry is an optimist, and that would be an optimistic view i felt much better about the principle worry that i had going into today does that mean we cant go down . But it just didnt sound to me we were about to have an escalation of the trade war right now. I tried to open the door for him go through it. At this moment, jim, how many times did he say he didnt want to get ahead of the curve on that that makes me feel more sanguine let the market come in a little, makes sense. Maybe not 4 , maybe 2 i thought it was good. David, i know that at times you like to temper my enthusiasm so, david, temper my enthusiasm. Well, listen, kudlow is unrelentingly optimistic you know that. I mean, he is the person who said the virus was relatively contained thats unfair well, it was a statement that was said on our air not that long ago obviously dont get mad at me im just making yeah. Youre mad at me. Youre mad at me hes mad at you, jim he is in the room he is part of the policy mmaking of the administration. So its important to hear from him to get a sense of what is being thought about. Guys, listen, we talk about the market it is largely down. We spent some time on boeing yesterday telling people there appeared to be significant demand for a bond offering at various maturities they got it down they upped it to 25 billion. 70 billion in an order book had been there for boeing. Whats interesting in the credit markets this is one of the largest Bond Offerings of all time, its not just that its giving boeing enough money to avoid government money, but also that its taken them well past this year, this time next year, probably into 2022 in terms of their liquidity needs, which is so important and, jim, you know when you hear in the credit markets that were back to a range on credit that reflects a normal recession as opposed to what were more dire pricings going on not that long ago. I was following this thing. I thought this was i said at the top, it was more important than apple and amazon. If boeing didnt get that money, what we would be looking at is i think the beginning of the end of Major Industries that will be actually nationalized. It could get that bad. Instead, the institutions came in big and for 5 , for a company that maybe that doesnt have the max, that has clients that are all hurting. So to me this was the most optimistic thing that occurred i dont want to be a larry kudlow apologist, which i just was, obviously, but the most important thing that happened was that there was money for boeing david, even the one of the greatest investors of our time, David Portnoy, said he wanted to punch boeing in the nose you may not know David Portnoy he meets with his barstool traders all the time i do think boeing is not the bleeding sore that we thought it was. Why did they want that why did they take 5 is that some magic level that they felt, you know what that will pep my performance 450 over is where the thing was priced over the corresponding treasury youre going from two years to 40 years in the disparity of paper they issued out there. So, you know, you take it. By the way, they the pricing initially was higher, but it came down as there was demand for it, which just shows it is a duopoly in a Worldwide Market that we know well one day one day David Calhoun said on our air a few days ago, it could be quite a few years, one day it will come back to what it was. They will get the 737 max up in the air or working again as well the whats that investors believe. No equity, david. 5 paper in this market no equity, no no i was surprised i thought it would be at 125 equity and i thought they would pay six. Yeah. Or go to secretary mnuchin. Not as part of the ppp they took their time. They waited for the Capital Markets to sort of be ready for them good cfo. A lot of that has to do with the fed. Yeah. And chair powell in terms of what theyve done to support those Capital Markets. Its not just Investment Grade weve seen a lot of activity in high yield as well and thats very important. In terms of the ability of companies to raise liquidity, so many are focused on liquidity, not growth or anything like that, but theyve been able to do it. Bankruptcies are happening this crisis accelerated what might have come. Bankruptcies will continue to happen theyll happen in energy, in retail but those companies that were viable are staying viable as a result of the Capital Markets. All great points. So true even down to the airlines themselves, jim. City has a note out today on their cash burn estimates for the group. The range is getting wider now they see 5 to 13 months of liquidity versus prior 6 to 12 jpm on boeing goes to 158. There will be a little more clearer picture over time about the winners versus the losers. We had this big spike two days ago, which i felt was a big short squeeze, a lot of covering of the cruise lines, of the hotels, the industries that people felt were hurt. Oil bottomed according to mike worth, the ceo of chevron. He made a compelling case that things will get better its interesting that oil has been nothing but up since the minus 37 day even though there was a hideous loss and exxon had a loss, a lot of charges there you did feel more sanguine about an industry that you know is on the ropes. So i think that you combine what we got on remdesivir with what were hearing about the finances of some of these companies you see why april is up. It doesnt make it so may shouldnt be april was up because of these things right right. Wti at the highest since april 1st today. Lets get to Rick Santelli this friday morning hi, rick good morning. Real quickly, i want to hit in on that deal, 25 billion for the lowest rungs of Investment Grade in boeing. What i found intense was not only was it 25 billion, which is huge, it was well oversubscribed to but came in at better pricing. We were looking at 550 of. The whole thing was 450 basis points over. Certain tranches were the the 40year was the highest yield at 462 over thats really good news at a price better boeing had to pay less than they originally thought. Oneweek charts. Oneweek of twoyear note yields, drifting lower oneweek of tens, sideways we are bouncing off the high 50 levels, which is a few basis points lower than the lowest close ever if you look at the biggest events of the week, its about the euro currency. Keep in mind, if they share debt, if they do a common bond, that would be bullish for euros. One week of the euro versus the dollar, its up. Its also up against euro versus yen and up euro versus the pound. This is significant. You want to Pay Attention to the strength in the euro and we have breaking news. Our april final read on the Market Manufacturing pmi, this pmi is only going back to may of 2017 but its enlightening nonetheless. 36. 1, that follows 36. 9, 36. 9 was the lowest ever in the three years its been around so is 36. 1 we want to keep you abreast of all of these well have big breaking news at the top of the hour with National Construction spending carl, jim, david, back to you. Rick, real see you in a few minutes. Rick santelli. Jim, i wanted to get to beyond meat with you. Its a year ago today we got the pricing. And today wells goes to underweight. They think Economic Conditions will forestall the wide adoption of plantbased meat. I disagree with that. I know also that mcdonalds thinks its a hobby. I think theres a lot here i think its also going to become an even safer alternative as we read about more and more meat packing operations that were written about in chicago, turn of the century. I think that this is not a sale. I think that this is here to stay plantbased is the way people like to younger people like t including people who are nonvegetarian. There is a Food Service Business they are right, almost every Food Service Company has been a disaster but i dont think the younger people will back away because of a wells downgrade. I think those people think its a stagecoach the other name we didnt get to this morning was clorox, which i know you have tonight. Yeah. Look, clorox had 17 growth. One thing about clorox, lets face it, bleach kills. Bleach is the only thing that does kill. Everybody trusts it. The biggest problem clorox had is they couldnt make enough thats a high quality problem. I carry it with me everywhere, the clorox thing with me people who are not carrying the clorox are risking something i know lysol is a comer, but this is cloroxs time. Its not like theyre trying to profitier. He has the best portfolio for this particular moment of any package Consumer Goods Company lets get to bob pisani this morning. Good morning, guys. Happy friday rough start to may the market, remember, has had quite a rally. We regained about 60 of the losses that we saw in march and april. Looking at the sectorers amazon is weighing on things down about 5 . The Consumer Discretionary sector, amazon is having a good time banks are down tech is down here. We got the semis down, lam research, micron and apple weighing on the tech sector. Consumer staples outperforming today on a relative basis. Defensive stocks doing better. The question is how does it look for may . Theres three little worry points here. I had a chat with art cashin about this last night here the most obvious concern for the rally is a potential wave of reinfections that might force some states to shut down obviously that would be bad. Obviously thats the clear risk out there. A lot of other people think that the reopening may be slower than expected and a lot of people last night were asking me about whether this new tariff war was brewing out there, art cashin asked me that you heard larry kudlow on that the answer is we dont know yet. But thats certainly a possibility. Speaking of art, i did talk to him. He said that other than the wave of reinfections, he thinks the reopening could be a bit of a bust, that people are not going to be flocking to bars and restaurants and movie theaters and airlines in any kind of level that people were hoping for. And that the vshaped recovery is unlikely. A lot more of my discussion with art at tradertalk cnbc. Com look at visa here. They said their numbers were hit hard in travel, fuel, restaurants, entertainment but then they said theyve seen a big surge in online spending okay good news and bad news there whirlpool said the same thing. 2020 revenue will decline 13 to 18 . Ouch thats not good news but then they said consumers were consumers were buying more freezers to put all this food in and buying kitchenaid mixers these sound contradictory. Theyre not if you dig deep, but it makes it hard to figure out where things are going to be going in the longterm were always interested in reopenings seebo said im sorry. I want to note the Companies Pulling guidance right here. Dunkin, honey well, stryker, newel. There was a comment this morning by cboe on reopening this is an issue for the new york stock exchange. Whats the issue for feeling safe is it a positive test, negative test those are the issues theyre going to be dealing with guys, back to you. All right bob, well see you in a little bit. The market is down we about almost 1. 75 boeing and verizon trying to stay green but not by much, and all 11 sectors are red were back in a moment life isnt a straight line. And sometimes, you can find yourself heading in a new direction. But when youre with fidelity, a partner who makes sure every step is clear, theres nothing to stop you from moving forward. S p giving back gains from the best month since 1987. Europe is closed today and we keep a close eye on more white house mmtacoenry involving u. S. china relations more squawk in a moment. Dont go away. Lets get to jim when you cut your dividend, even though people know its knowledge it could happen, its still a shock. Western digital got rid of their dividend youll talk to them later, but the stock is down 6. 5, and yet, i think they did the right thing. Conserving cash is not a bad idea they had to fix their balance sheet. Cant be crazed about wanting to own the stock. Theres better opportunities including apple and amazon, but when you get rid of the dividend, it hurts i want in the brief time we have look at Charter Communications the continued surge in new connections for people who want broadband is powering that stock. Charter shares are up 5 this year up almost 3 on the session right now. They did add a lot of Residential Broadband customers. They did lose a good amount on the video side, but remember, broadband is the key product the far higher margin product. We saw it with our Parent Company yesterday with record ads in terms of broadband, although significant losses in residential video. The market is rewarding that and the read through is to the likes of a netflix thats also up this morning. More people connecting more people getting those services that allow them to stream in the home in a very effective way. And our thanks here to all our broadband providers. So far, so good. Netflix going to an alltime high what a stock faang. Yeah. Next week disney and viacom. We have clorox tonight and estee lauder i cant believe that stock isnt down big and Seattle Genetics theyre up the most because of some breakthroughs what a day what a week. Yeah. We have these eight days a week things now. I know. It will be interesting to see disney next week i noted on our Parent Company numbers, the loss from having the theme parks closed thats a big number. And so it will be interesting to see what disney has to tell us on theme parks, on how they reopen them, on espn, on the closure of or lack of production right now disney plus has been a big plus for the company. Its down 26 for the year, but some say perhaps is being rewarded for being the icon that it is. I think thats why they can raise capital. Stock was in the 90s, high 80s it bounced effectively but i have to tell you almost every one of their businesses with the exception of disney plus is challenged ive always liked disney, but this is a tough own right now. Yeah. Well keep our eye on any commentary for disney. Any parties this weekend a boozy brunch. Its on zoom david, im not giving you the pass word. Its an extraordinary event. Its the only thing where i get to have real communication with anybody. Are you going to be overserved last week, it was orange juice with something that whoever put it together crushed me jim, have a good weekend. Well see you tonight. In the meantime, welcome to squawk on the street. Were going to get ism manufacturing with Rick Santelli good morning again, rick good morning. Ism manufacturing 41. 5 for april. Im pretty stunned by this i was preparing for something much smaller, but on that event of 41. 5 is the weakest level nonetheless, since april of 09. Many thought it would be in the 30s. Even though it wasnt a terrific number, it was better than expected lets go through some of the internals on new orders. This is about what we all expected 27. 1 i mean, last look was 42. 2 obviously new orders, you would expect isnt going to be surging. Even though maybe manufacturing ultimately will fair better than services weve shut everything down with regard to prices paid, 35. 3 versus 37. 4. We all know theres a disinflationary whiff in the air with all of this and finally the Employment Index considering next week were going to get jobs report moved from 43. 8 to 27. 5. Nobody is expecting good numbers. We had Construction Spending were looking for a number between 3 and 4 . Shocking it was up. 9 thats a march number. We could argue about the effects of coronavirus we are seeing yields move up theyre up three basis points on the week 60 on friday we settled at 63 yesterday were down a bit on the day. All things considered, treasuries pretty quiet this week in terms of the range Central Bank Buys a lot of treasuries theyve bought more in the past, they can buy more in the future. The signals from that market are a bit impaired carl, back to you. All right rick, thanks Rick Santelli with that ism manufacturing number apple and amazon are the two big stories of the morning for that lets go to mark and chris. Happy friday thank you for the time, as always good morning. Good morning. Mark, the price action on amazon is more pronounced this morning. I mean, whether its the commentary or the q2 intelligence they gave us, i wonder if youve ever seen a quarter quite like this from amazon no. We havent i think there were two there was one eye opening number and one eye shading. The eye opening number was the 4 billion they planned to spend on q2. It was on the front page of their press release. They told the longterm investors to grab a seat they werent going to think small. And so theyre spending 4 billion. This is to make sure their employees and their systems are as sufficient, safe as possible. Our view is those are temporary expenses and whats the permanent take away is they showed this dramatic acceleration in Revenue Growth theyve just separated from the pack you thought Online Retail accelerated in the march quarter, it did. Amazon truly accelerated its going three times faster than overall Online Retail we think theres a longterm structur structural the stock pulls back this creates a buying opportunity. Its not a back up the truck price here id want to be lower but this, the core long thesis is very much intact on amazon. Weve talked about them in recent weeks, mark you and us, and the opportunity thats been given to them in the way of customer attraction, and the challenges they have in keeping those customers over the longterm. Does this 4 billion in expense suggest to you they are struggling to do that or that theyre on track i think theyre struggling to do it. I think thats the direct answer its a hard thing to do. They talked about seeing Something Like a 50 x increase in things like the demand for groceries. Groceries came up a couple times last night theres nobody with logistics to handle a 50 x increase surge in demand that said, theyre scrambling as quickly as possible. I asked the cfo, how long is it going to take to get back to the fulfillment efficiency prior to covid he wasnt sure but its a great challenge and if any company can figure it out, i guess amazon can. Are you in the 3 k camp, and when do you think you start to see the stock inflect the target i believe in the target i dont think this year. I think thats 2021. And look, the stock is already inflected. Amazon shares have outperformed the market year to date. Not at all surprised to see a breather in the shares now by the way, i think theres better alpha generation and other names in the internet space. This is not one of our top picks for the balance of the year. Longterm, if an asset thats competitively, structurally stronger because of covid, there are very few jim mentioned netflix earlier. Heres the second one, amazon. These are better longterm buys coming out of the crisis than going in and they were good buys going in all right chris, on apple obviously the things picks up the most were comments about a pickup in the second half of april and skipping the forecast for the first time in more than a decade how jarring should that be to someone who owns it . I would say the lack of april, june guidance was not a surprise it was expected among the investor base. To me that was a nonissue. I think april demand starting to turn around in china is a Huge Positive i think cook did mention the april demand is still below january levels it seems like a silly way to get back to normal, but all in all, june quarter is typically a low quarter for iphone i think all in all, i would say isnt a huge surprise. At the margin, the incremental demand in china was a positive i think the services being resilient kind of speaks to apples model as a company with as diverse as you find with a Stable Revenue stream on top of the hardware business. Chris, the president is talking tough on china again chinas currency fell to april lows theres increasing anxiety we could start another trade war. The president said the coronavirus blame is front and center when it comes to the relationship with china and the trade war and trade deal they made was secondary how big of a risk is this for apple no matter what they reported last night . Its a valid question i think its a concern thats been going on, i would say more than apple to the supply chain, especially for the Semi Conductor and some of the stocks hammered since yesterday and also theyre being pretty weak today. Its part of the concern around some of the rules that bis, because theres a subdivision of the department of commerce is drafting i think the problem is its a political issue. Its hard to see the outcome in the grand scheme of things, i dont think its a huge negative for apple. It doesnt change the pieces, but i would say the bigger risk is more on the supply chain side where people are worried about more on the components that goes into any of the china infrastructure i want to get a sense of your view of the 4 billion and what you call temporary expense at amazon. I know they said on the call 300 million of it is on testing. That number alone is just staggering when you think about it although, they do have an awful lot of employees but what are they spending it on and is it going to create any leverage for the business in the quarters to come they gave a couple examples deep cleaning of facilities. Theyre changing some of the work flow processes within the Distribution Centers themselves so that employees always stay six feet apart from each other those kind of expenses i think they said they were purchasing 100 million face masks for their employees. That was in the press release. Those are the kind of expenses that are in there. We hope, i think we all hope, that those are not expenses that are going to have to be paid on a quarterly basis for the next several years. Theres maybe two interesting dynamics it should make it better for amazon employees im sure its challenging to work in some of those Distribution Centers as Central Service employees frontline employees and for the people delivering for amazon. So the more that you can protect them ensure their afetiy, the better for them, the better for amazon 2 its possible that consumers are going to want to make sure that whatever packages they receive are as hygienic as possible. So amazons probably increasing the hygienic competitive boats around their business. That sounds odd, but theres probably that drif tifftierivat. And there seemed to be disappointment with 33 increase whats your take on what is an important profit component of this company it disappointed our number. We were looking for a point of acceleration they gave a point of deacceleration we asked the cfo about it. His direct answer was they are very broadly distributed across the u. S. Economy so they did have customer verticals that went dark on them thats my terminology, that the theirs im talking about travel, hospitality. If the bigger the company, youre going to have areas of weakness they had their gaming verticals go ballistic they had their Home Entertainment streaming areas, netflix is a customer surge. They did have some real weak areas and that the bounce of all that caused a point of deacceleration i think that growth is relatively consistent. The backlog was consistent whether theyre losing market share, theres two other really good competitors in this space, at least google is a maybe well see. But all three of the companies are showing good growth and they should be able to sustain that i would suspect amazon, aws has sustained close to 70 they have competitors in grocery including walmart and kroger which both have a lot more Grocery Stores than amazon and whole foods which i think only has 500 Stores Across the country. Have they rose to meet the incredible demand there is for Online Grocery right now and that there could be as a permanent fixture of this crisis the direct answer is no they talked about increasing their grocery capacity by 60 its still not enough to see a 50 x increase in peak. Instacart, i think that company has had to scramble to meet demand i theyve done a pretty good job. If theres a structural change thats going to come out of this, Grocery Shopping online has been sluggish for the last decade it requires a major change in consumer behavior. Well, our guess is that this crisis is whats going to push that change in behavior. We think amazon can rise of the occasion and youll start seeing larger buckets of purchases by their customers. The baskets are going to get bigger and theyre going to include groceries. Its great for a frequency type business which amazon is groceries are all about frequency. China retail interesting. Foot traffic not back to precovid levels but record retail when you bring in online. Does that have implications for u. S. Retail as well. I would say yes i guess china has a good template in this youve seen the Retail Stores open up and the u. S. Hoping things dont get worse, probably a couple months behind china you see a similar thing on the consumer demand. Demand is recovering i would say china is probably a good template from that perspective but also keep in mind in the march quarter, apple typically does see a seasonal optic from china this usually happens with chinese. The work from home in general does benefit the services. Appreciate your time. Chris and mark, well see you soon thank you carl, the ceo of gilead joined our meg earlier this morning on squawk box to talk about remdesivir and their approach to covid19 take a look at what he told us this morning maybe its a little bit of a surprise to us that this medicine also worked quite well late in the disease course as well many of the patients were on mechanical ventlation. Around 30 those are the most severe patients that has a big impact for patients, of course, with so many hospitalized patients in such great need. The gang also asked him about the availability and allocation of the drug. We are focussed on making sure on a global basis that this medicine gets into the patients that need it and were focussed on how best to allocate the medicine you know, in these days than how to convert that to an allocation when we have more supply, but the supply that we have in our hand right now, the 1. 5 million viles of remdesivir which equates to around 100 to 200,000 patient courses depending on if its a five or tenday treatment, well donate. We didnt want anything to get into the way of the this medicine getting into the way of patients and thats a global donation its we will work with countries and Health Care Systems around the world as they make this medicine available to their citizens based upon the regulatory requirements to do our best to make sure we can allocate that accordingly. Wall street might not like that with gilead stock, but that offers hopeful signs in a week where the good news kept coming on remdesivir from the nih study to dr. Anthony faucis study that he sees a light at the end of the tunnel talking about a standard of care as you were talking about, there needs to be more drugs this is an antiviral. Its not more everyone, but the signal so far is positive. I think if you put that with the hundreds of other Clinical Trials going on, everything from fuji films pills to the antiinflammatory and satellite drugs being repurposed, theres so much work focussed, resources and Companies Big and small that are working on this that the hope is that by the fall, when many of the foremost doctors in the country expect a big second wave, we will have tools to fight it so its not as lethal and its not as scary in terms of icu visits right i mean, every day there is an increased understanding of the virus which obviously is a fairly complex were still learning things that go against what were presumed or assumptions early on in terms of what it goes after and what the impact is. Youre right listen, this is an important development. But i when you speak to Health Professionals and we heard from the former fda commissioner as well, it changes the risk profile but its an infused medicine given in the hospital to people already seriously ill. To your point, when there are oral antivirals that will be a game changer as will a vaccine if and when we finally get there. And there are a lot of Lesser Known Companies that are working on that, so obviously were going to continue to monitor that and bring any news. Definitive news in those trials as we get them lets get a quick check on where we stand across the major averages on the first day of the month of may stocks are lower s p is down about 2 the dow is down 458 points apple and amazon not helping. Amazon under some pressure not helping. The nasdaq is down 2 dont go anywhere. Were back in two minutes. Resmed looking to double or triple the output in response to the outbreak we are joined by the ceo were you able to keep up with demand in terms of supply at the number of hospitalizations with covid19 sara, it have a huge global feat, and we saw the covid19 virus and the disease that causes covid19 move from wuhan to milan to new york, and we were there right at the start in wuhan, and we tripleled our production in china. And we recorded our earnings yesterday. Im happy to say that resmed, we followed through in our promise to triple production we produced 52,000 ventilators noninvasive from january 1st to march 31, 2020 and thats three times what we did considerate same period in 2019 so weve moved a whole bunch of production through and we saw a lot of that get through. But the demand was there what about since then a lot of studies have come out showing the prognosis for people going on ventilators is not area with the recent new york area showing 88 of those on ventilators did not survive. Have you seen demand decrease as weve learned more about this virus . It depends on what type of acuity of covid19 the patient has. Theres different types of therapy used not just full int bags the National Health service in the uk has a protocol that uses cpap devices as well as oninvasive and invasive therapy. Weve seen survival rates on patients when they move up down the ventilation therapy 30 to 50 . Theres an evolution for covid19 were not just jumping to what is used for ards which is where you jump straight into tracheal intu bags. Theyre looking at noninvasive ventilation. Were Getting Better survival rates and better use of the therapy for the acuity of the covid19 patients when you use the variety of ventilation therapies. How many of those do you make you mentioned the cpap youre saying that can be used instead of the ventilator . What else are you looking at they use a bunch of different types of therapies sometimes cpap at the early stages quickly onto bilevel, and noninvasive ventilation and invasive we make more than 2. 5 million cpap, but noninvasive ventilators we were able to produce 52,000, triple our previous years production for the march quarter. It was great to see the products get to countries all around the world. We sell in 140 Countries Worldwide and we probably helped save tens of thousands of lives of people. We dont actually save them. I saw the segment with gilead where theyre looking for cures and vaccines all we do is keep a patient breathing while their immune system fights the virus. We know many of the patients are able to survive if they can get through the fluid in the lungs and keep their body going, their immune system can fight the virus. Its interesting. Ive seen a lot of interesting stories about the secondary market and brokers moving ventilators around the world are you beginning to see signs that supply demand balance is happening at least in important markets . Well, look, weve taken a very global approach to this we created an epidemiology model where we modelled the flow of covid19 as it moved from asia to europe to the u. S. And now its just starting to move to south america. All of latin america middle east, Subsaharan Africa and other parts of asia it wasnt at before we looked at the Global Production we produced 52,000 ventilators in the First Quarter of the calendar year. We then allocated that production to the regions on that humanitarian. Our primary goal is preservation of life and we optimized flow of ventilators for where the need was. We didnt use dealers. We used our supply chain going direct to governments. We worked with fema and hhs in the United States to get a number of ventilators in a contract there it was a 30 million contract. And we worked with nonpublic contracts with 120 Countries Worldwide. At the National Level but also at the state level and very importantly, with relationships we already had with the hospitals as this virus goes, the flow and the need of ventilators just shoots up so quickly our job is to make sure were ahead of the curve wand we tried to do that in most countries and cities we were able to do that where are these ventilators and other machines youre talking about manufactured so our unvase invasive ventilator is manufactured in sydney, australia. We have another one manufactured in sydney, australia and then we have another product called the loomisst manufactured in singapore we have a Global Supply chain. Were able to get the products from sydney, australia, or singapore to 140 Countries Worldwide. I must say during the process, it was hard to get some of the logistics going because so many of the planes were not flying. Well, sure. And it also raised awareness in this country about how little is actually manufactured here in terms of these critical need products can ventilators be produced in the United States . Absolutely. We produce masks in atlanta, georgia and have a large 500 square feet facility there that we have manufacturing here in the United States in georgia and we are looking at further investments, particularly for customers like the v. A. A and others that like to see made in america. And as you saw through the process, one push comes to shove in terms of flow of patients and a virus like this, people want to make sure the manufacturing is close to the need and the need we saw particularly in new york and new jersey, was just incredible during the peak of this crisis. Four weeks ago our company was all laser focussed on new york we made sure we got our noninvasive ventilators for hospitals across new york. One doctor at mt. Sinai used our ventilators in ways theyd never been used before in miranda warning emergency settings and helping keep patients alive. Thats great news thank you for joining us from resmed thank you, sara lets hit our etf spotlight. The energy sector. Xle under pressure up almost 25 from a month ago levels top holdings, chevron and exxon mobile moving lower after the quarterly results. Both Companies Say theyre planning to reduce Capital Spending this year no surprise there. Both getting hit exxon is a 30 cut were going to take a quick commercial break stay with us on squawk onhe re. T theres tv. And then theres x1, featuring the Emmy Awardwinning voice remote. Access to your favorite apps, including netflix, prime video, youtube and hulu. All without changing passwords and inputs. The most 4k content and movies and shows on any screen. The best Entertainment Experience all in one place. Good morning, everybody. Im sue herera 155,000 air travelers went through tsa check points yesterday. Making it the busiest day since march 30th however, the number of air travelers is still down some 94 from the same day last year. All Domestic Airlines will soon require masks or face coverings be worn by all passengers and the employees who interact with them the industrys main trade group says all carriers are working on implementing the new rules this follows similar decisions by individual airline included united delta and american. In shanghai a look at how theme parks might reopen disney staged a limited reopening of the Shanghai Disney resort with masks and security guards carrying contactless thermometers disney has not announced plans to reopen the parks yet. Well keep you posted on that. As always, you can get more on our coronavirus coverage by going to cnbc. Com. David, back to you okay. Thank you, sue well, shares of boeing have turned around. The Company Successfully raised 25 billion in the bond market coming up next, well speak to the cohead of Global Investment banking at jpmorgan and talk about the health of both high yield and Investment Grade bond markets after this since 1926, nationwide has been on your side. Weve been there in person, during trying times. Today, being on your side means staying home. Nationwide office of customer advocacy. But we can still support you and the heroes who are with you. Were giving refunds on Auto Insurance premiums, assisting customers with financial hardships, and our foundation is contributing millions of dollars to charities helping with covid19 relief. Keeping our promise to be on your side. And. L music fades in . Hey hi welcome back to squawk on the street. It was a big day in the Corporate Bond market yesterday as boeing successfully raised 25 billion. Many other corporations also availing themselves of the Capital Markets to raise muchneeded liquidity. Lets bring in jpmorgans cohead of Global Investmentb k banking jim casey. Always nice to have you with us. I know you cant speak specifically about the boeing deal, but what does boeings ability to raise that much money at that price say about the health of the Corporate Bond market right now david, i can give you some of the details on the boeing deal it was 25 billion as you mentioned. It was ranged in maturities from three years out to 40 years. There was tremendous demand for this deal. We were originally thinking that 10 billion plus or minus was going to be the size, and it obviously because the order book grew rapidly, were able to price a much bigger deal, and i would say the takeaway from my perspective on boeing in particular is that investors were clearly willing to make a longterm bet on boeing without a doubt. Because the interest out of the 25 billion we did 16. 5 billion in ten years and longer so investors, it was a huge vote of confident on the invest want grade market on behalf of boeing this is the largest financing year to date, and its the largest ever nonmerger and acquisition transaction. And the pricing also, i think, got better and better for boeing, roughly 450 over the corresponding treasury what are we seeing right now in terms of what corporations are paying . How would you characterize it . When we spoke to you on march 12th, and it was early on the crisis, but the yields were extraordinarily high thats come in, hasnt it . Its come dm a lot, david just to give you perspective on this i think when we spoke yields credit spreads in Investment Grade were roughly almost 400 basis points over treasuries we were clearly in crisis, and yields have come in materially so if you just think of this in percentage terms and you compare the backup in the Investment Grade market during the month of march when we hit the high yield point, Investment Grade has recovered 57 of spread widening if you compare that to the s p 500, the s p recovered about 48 . Clearly the rate of recovery in Investment Grade has been faster than it was in equities. And i think what the Investment Grade market is telling you right now is that we are out of crisis mode, but were in sort of recession range, and so right now credit spreads in Investment Grade are around 240 over treasuries if you compare that to other recessionary time periods over the last couple of decades, you look at the Oil Market Crash in 2016, spreads were 250 at that point in time. You go back to october of 11 during the euro zone sovereign crisis, spreads were 270 even going back to the tech crash and enron, spreads were around 280 or 290. Were in that zone where clearly there are going to be economic challenges but the Investment Grade market is clearly telling you were out of crisis mode yeah. So whats been the help there . Has it just been time and the ability of investors to focus on the longer term . How important has the feds willingness to be in there been to sort of stabilize in the market, im well, the fed is signaling because the fed all it has to do is signal. And jamie diamond likes to say the fed has not brought out just the cannon they brought out absolutely all of the artillery available to them there is in pretty much all asset classes, the view is theres a fed put at this point, and that is absolutely helping the marketplace. So theres no question about that the second thing, though, that has been interesting in Investment Grade, when we spoke last time, we we had pointed out to you that there was about 100 billion of cash that was taken out of the Investment Grade market and that money clearly has to be replaced in order to have issuance as high as weve had lately and that money was replaced by nontraditional investors. You had hedge funds coming into the market you had a lot of high yield investors coming into the Investment Grade market. Reason is the yield levels you could get in Investment Grade at that point were very similar to what you had been able to get over a long period of time in the high yield market. So it was not uncommon to get an Investment Grade yield of 5 and so people flooded into that market even though money was leaving the market right you mentioned high yield. Lets get to that. When we last spoke again, it was march 12th, i believe. We were talking about 9 overall yields in high yield obviously energy still an important component of that overall market you were al concerned, jim, at the time, about fallen angels, Investment Grade that becomes high yield, some of which has terms longer than ten years which is not ideal for the high yield investor what are we seeing there are you still concerned about downgrades is the high yield market handling this increased demand were very much concerned about downgrades, fallen angels, when you basically exit Investment Grade to go into high yield. And just for some perspective on that, david, our the Research Analysts at jpmorgan think there could be 200 to 220 billion of downgrades this year into high yield, and just to put that in Historical Perspective for you, if you take all of the downgrades that occurred between 2014 and 2019, that still wouldnt amount to as large of a number as that and if you went back further to that financial crisis, there was about 130 billion of downgrades in 08 and 09 this would be new for downgrades if it happens. What is it going to do to the market if it does happen i would say i dont think the high yield market can absorb all of that. Were not going to have a clean transition but i also think, david, that Asset Managers will figure out a way to deal with it where theyre not forced sellers there will be some forced selling. But i think that there should be a significant amount of that that can get absorbed in the high yield market. For one thing, youve got investment families that have the ability. They run both Investment Grade money and high yield money what they might choose to do is have their high yield managers take over a portion of those Investment Grade portfolios. Youll also have other nontradition investors come into the market credit hedge funds may choose to buy extraordinarily cheap long dated paper. The reason why i say that is high yield funds in general dont like duration beyond ten years. So i think if youve got a number of Investment Grade companies that get downgraded and theyve got 20, 30, 40 year paper outstanding, i dont think high yield investors are going to have much of a bid to that, but i think well find some interest in hedge funds at price levels finally, on the management side of your job as global cohead of investment banking, how are you going to manage bringing people back to the office many of your traders are working from home. Certainly remote locations and the like is it going well is it something that you want to change immediately how are you approaching sort of bringing people back to work and what are you expectations . Well, just answering that with numbers, i would say that its going extraordinarily well at jpmorgan now. And just just think about whats been happening in the Investment Grade market, david so far year to date weve raised 740 billion for our clients so in, again, for perspective, in 2019 the sum total was 1. 1 trillion in an environment where theres a lot of our folks working from home, we also have a lot of people that are working at satellite offices as well. And at the main Head Quarters of jpmorgan but i think its working quite well, becauseweve been able t put out twothirds of the volume of all of 2019 in onethird of the number of calendar days. So i think its working well and i think jpmorgan is going to be very cognizant of the safety of our people, and were obviously going to follow all the guidelines that we get from the federal and the state governments, but were going to make sure that our number one priority is safety and number two is making sure we serve all our clients in need of capital and advice yeah. Well, they are successfully raising it so far, at least, those who can. Jim, always appreciate you taking time. Thank you. Sure, david bye. Bye bye david, amazon now down 6 plus as house members are demanding that jeff bezos testify. Lets get to eamon on this yeah. Thats right its the House Judiciary Committee that just sent a let tore amazon requesting that jeff bezos testify on capitol hill. This follows out on a wall street journal investigation that found that some amazon employees were apparently looking at sales data from Third Party Sellers on amazons website to look for trends that amazon might capitalize on itself to make competing products against its own Third Party Sellers on the site. Now, an Amazon Official last year testifying on capitol hill said the Company Simply doesnt do that. And theres some concern now on the part of members of congress that amazon lied to the committee. Heres what they say in their let tore jeff bezos. Theyre saying here in 24 letter to jeff bezos this has a request for voluntary testimony on capitol hill but the committee reserves the right to compulsory process. Theyre threatening a subpoena here back to you. All right thank you. Amazon down more than 6 . Later this afternoon, do not miss another exclusive this with bank of america ceo 3 00 p. M. Eastern on the closing llbe a lot more squawk on the street. Stay with us one of wall streets bigger bears sees a glimmer of opportunity. More squawk on the street coming up. Youre going to see delivery as a bigger part of the mix going forward. I think digital, particularly mobile order pay and maybe the ability to go to curb side which we have across most of our major markets. I do think youre going to probably see those grow just as consumers come out of this, and there going to be a change, i think in terms of how consumers go about their daily lives we have seen an incredible rise in demand, but it all happens because our people are safe, theyre able to operate, our customers are length in with us creating thisenvironment that nobody could have predicted a few short weeks ago. I think traffic will continue to improve and i dont think we need to have the economy back to 100 to have reasonable returns. Starting next week, here in the u. S. , we are going to open a significant number of Starbucks Stores by early june, we plan to have over 90 of our stores open in the u. S. We are going to monitor and adapt phase which is the path to recovery. I dont think youre done preparing or reacting in a moment like this i dont think weve taken a particular view whether this is a twoyear or threeyear or fouryear recovery were mindful of those conversations. We need to make sure were taking the appropriate actions in the short term. Were focused first and forecast most on the safety of our people weve taken every precaution we can think of we get data every day. If we see trends that work against us we will not be afraid to take the right actions and suspend again. But at any rate were in a decent place. The drop in bookings, the increase in cancellations and drop in traffic in march was breathtaking here we are. The good news is that southwest is very well prepared. Just some of the ceos who have joined us this week to talk about how to reopen the american economy. Well take a commercial break here dow well off session lows of minus 505. Dont go away. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Retailer j. Crew is preparing for a bankruptcy filing that could come as early as this week already working with a heavy debt load the privately owned j. Crew struggles have been exacerbated by the covid19 pandemic now looking it secure 400 million in financing to fund its operations people familiar with the matter tell cnbc. J. Crew declining to comment on this report. Read and find the latest on this story at cnbc. Com. They were going to ipo their made well brand but they ran too the pandemic and the loss of traffic, like so many other retailers, and are hurting quick programming note for you as we head to break, dont miss an exclusive interview with bank of america Ceo Brian Moynihan anthceofd e o sax, and well be able to talk about the retail pain well be right back. Llars. I had good health insurance. Why isnt this covered . Well, then they started getting bigger. Eighthundred dollars. Eighteen hundred dollars. I saved for this. But not that much. Im glad i had aflac. They gave me money when i needed it most. Thats why aflac is here, to help with the Expenses Health insurance doesnt cover. I love that aflac duck. Aflac get to know us at aflac. Com yeah, everything is runningis smoothly with the now platform. bling see, incident resolved. How did you. Gotta enjoy the small wins. You keep being you, derek. Keep being you. Welcome back to squawk on the street. Several airlines are considering requiring facial coverings on all their u. S. Flights in response to the spread of the virus. Phil lebeau has more on what airlines are and which airlines arent phil well, as of right now, david, most airlines in the u. S. Are saying yes, it will be required that you wear a face mask when you are flying now some are starting on monday, some are starting a week from monday alaska is the latest to announce this morning it will require passengers to wear face masks. The crews will start on monday and then on the 11th of may when passengers will be required. When you look at how Many Airlines are doing this, weigha interesting weve heard from all almost of them for some airlines its at the ticket counter as well as the gates, not just on the airplanes. United airlines, take a look at shares moving lower today. They wrapped up the Earnings Call a lot of questions about liquidity. They ended yesterday or the day before with 9. 6 billion of cash in the call, ceo incoming Ceo Scott Kirby was asked how far do you go to maintain liquidity, he said all options are on the table. One last Airline Stock to take a look at, shares of american, evercorps out with a note today, the headline unsustainable, cutting the price target from 10 down to 1 and the big concern is cash burn and liquidity. Guys, back to you. All right two quickies on this, phil are they going to provide the masks or do you have to bring them yourselves and what about kids thats part of the reason why it may take time for airlines to ramp this up theyre encouraging people to bring their own masks. What happens if somebody gets there and says i dont have a mask they will have to find a way to provide masks to some of those passengers who do not have them. I think thats the big concern they dont want to turn anybody away, but it is going to be a requirement. And kids are exempt i have not checked in terms of whether or not kids are, emts obviously you know the cdc recommends im not sure at what age they do not think 2. Kids should be wearing face masks. 2 and understand i would assume theyre going by cdc guidelines but i have not heard a definitive answer in terms of the cutoff. Carl, back to you. Hard to find those little ones. Phil, thank you very much dow is down about 402 to start this friday morning. Good morning, everybody. Welcome to squawk alley. Im Carl Quintanilla with Morgan Brennan and jon fortt. Theres a lot going on as we begin the month of may obviously as lot of white house commentary we talked to larry kudlow earlier this morning but amazon and apple are the two big earnings stories and on the plap front we turn to josh lipton to start the hour hey, josh. As we know millions of people are now working and learning from home. I got the chance to speak with apple ceo tim cook and asked about that, how is that impacting business, how is that impacting demand for his products and services . Cook telling me, its clearly helping the ipad and the mac we envision both of those to have improving year over year performances in this current quarter. What we see is that the use age of face time has gone through the rife, not getting talked about as much, but the usage says otherwise i asked cook about the new iphone, the se that comes with th